Correlation Between AU Optronics and Gigabyte Technology

Can any of the company-specific risk be diversified away by investing in both AU Optronics and Gigabyte Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AU Optronics and Gigabyte Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AU Optronics and Gigabyte Technology Co, you can compare the effects of market volatilities on AU Optronics and Gigabyte Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AU Optronics with a short position of Gigabyte Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Gigabyte Technology.

Diversification Opportunities for AU Optronics and Gigabyte Technology

-0.39

Correlation Coefficient

AU Optronics  Gigabyte Technology

Very good diversification

The 3 months correlation between 2409 and Gigabyte is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Gigabyte Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigabyte Technology and AU Optronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AU Optronics are associated (or correlated) with Gigabyte Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigabyte Technology has no effect on the direction of AU Optronics i.e., AU Optronics and Gigabyte Technology go up and down completely randomly.

Pair Corralation between AU Optronics and Gigabyte Technology

Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Gigabyte Technology. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.46 times less risky than Gigabyte Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Gigabyte Technology Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  25,150  in Gigabyte Technology Co on September 15, 2024 and sell it today you would earn a total of  1,650  from holding Gigabyte Technology Co or generate 6.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AU Optronics  vs.  Gigabyte Technology Co

AU Optronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AU Optronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Gigabyte Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gigabyte Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gigabyte Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AU Optronics and Gigabyte Technology

The main advantage of trading using opposite AU Optronics and Gigabyte Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Gigabyte Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gigabyte Technology will offset losses from the drop in Gigabyte Technology's long position.

The idea behind AU Optronics and Gigabyte Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.